Canadian Dollar Rises on Yen Selling Before Inflation Report

By Ari Altstedter -
Apr 19, 2013

The Canadian dollar rose for the
second day against its U.S. counterpart as Japan indicated its
policy of printing yen to stimulate the economy were unopposed
by the G-20, sending investors into higher yielding currencies.

The currency fell against the majority of its 16 most
traded peers ahead of data expected to show the consumer price
index fell to 0.3 percent in March from 1.2 percent the month
before, bringing the annual reading to 1.1 percent, close to the
bottom of the central bank’s target band between 1 percent and
3 percent, according to a Bloomberg survey of 21 economists.
Japanese Finance Minister Taro Aso said Japan’s asset purchases
that have caused the currency to weaken were unopposed at a
Group-of-20 meeting in Washington.

“We see a weaker yen and therefore there’s a move into
riskier assets, that could be why equity markets are higher,
because the market sees no opposition to Bank of Japan policy
and they see further quantitative easing which is going to buoy
equity markets and buoy the Canadian dollar along with it,”
said Eimear Daly, a currency market analyst at Monex Europe
Ltd., said by phone from London. “I think it’s going to weaken
off if the CPI number comes out less than expected, because
people are starting to think weaker CPI it increases the
possibility the Bank of Canada would have to ease, and so a
weaker Canadian dollar.”

The loonie, as the Canadian dollar is known for the image
of aquatic bird on the C$1 coin, rose 0.2 percent to C$1.0248
per U.S. dollar at 8:13 a.m. in New York. One loonie buys 97.58
U.S. cents.